Infra’s pendulum swing
Cautious optimism was the overwhelming vibe at the Infrastructure Investor Network’s America Forum in New York last week, and it seems GPs are being cautious in deployment too, with some looking to find additional protections when committing equity, according to Nick Hertlein, managing director at Stonepeak.
“From the lens of a renewable energy investor, the last three years has been extraordinarily volatile. I think going into 2020/21, perhaps the pendulum swung away from value preservation and risk management and the focus was on value creation,” Hertlein, last week featured in Infrastructure Investor‘s Rising Stars, told the network.
“Since then, especially in the renewables landscape, although I think you’ve seen this play out across infrastructure, interest rates are up, supply chain issues have really ripped up business plans that were put in stone in 2021 and I think that’s sitting in the back of every GP’s mind as you look to deploy capital in 2024 and into 2025. I think that pendulum has absolutely swung back to value preservation.”
He added: “The natural result of that is that preferred equity, and other ways to derisk transactions, have really been at the forefront.”
Nothing wrong with conservative capital in infrastructure, of course.
AI’s financing acceleration
Quynh Tran, Sumitomo Mitsui Banking Corporation’s deputy head of American structured finance, who also spoke at the event, told the audience that the bank’s first data centre deal came eight years ago.
Tran noted the developer was extremely excited by, what was at the time, the largest lease ever signed by a developer: 25MW.
“Fast forward and we were doing smaller transactions, maybe two, three a year, until about early 2022,” Tran said.
Suddenly, leases were for 100MW to 300MW. Tran estimated that since March 2022, SMBC had led $31 billion in data centre financing.
“That is just construction financing, not acquisition financing, not revolvers,” she emphasised. “But the more interesting fact is that 70 percent of that has been in 2024 and a lot of that has been driven by AI.”
Luckily, AI is here to help predict the economic impact of AI.
Eversource powering up for second climate fund
Eversource Capital, a joint venture between Everstone Capital and Lightsource BP, has launched its second fund, Eversource Climate Investment Partners II, with a target of $900 million.
According to a public information summary by the US International Development Finance Corporation, which has committed up to $50 million, Fund II will build upon the strategy of its predecessor, the Green Growth Equity Fund, by investing in companies addressing critical climate adaptation and mitigation challenges.
Fund II will focus primarily on India, with additional investments in South and Southeast Asia, with sectors of investment including renewable energy, energy transition technologies, electric mobility, circular economy initiatives, water management and sustainable agriculture.
In 2018, Eversource won the mandate to manage the Green Growth Equity Fund, the first investment from the fund of funds strategy of India’s National Investment and Infrastructure Fund.
GGEF reached a final close on $741 million in 2022 with investors including British International Investment and Dutch development bank FMO and was billed as the largest-ever climate impact fund raised in India.
BNP Paribas launches €750m low-carbon fund
Paris-headquartered BNP Paribas AM has announced the launch of its inaugural low-carbon equity strategy, BNP Paribas Low Carbon Transition Infra Equity Fund I. The BNP Paribas Group has provided €400 million in an anchor commitment, taking the fund some way towards its €750 million target.
The fund aims for minority participation in eight to 12 European investments within the core plus and value-add segment. The focus for the Article 8 fund is on energy transition projects, including new sectors such as batteries, hydrogen and carbon capture.
Seed investments so far include a minority stake in an Italian renewables developer, Absolute Energy, majority-owned by I Squared Capital, and a co-controlling stake alongside Mirova in French rooftop PV developer Arkolia.
BNP Paribas has two other infra funds in the market: BNP Paribas European Junior Infrastructure Debt Fund II, BNP Paribas Climate Impact Infrastructure Debt, both launched in the past 12 months.
That anchor commitment should ease the fundraising travails, though.
Grapevine
“We already have new nuclear. It’s called solar.”
Bill Green, managing partner at Climate Adaptive Infrastructure, tells the Infrastructure Investor Network in New York there might be other options to small modular nuclear
Who’s hiring
Infra veteran Annesley Wallace lands top job at HOOPP
The Healthcare of Ontario Pension Plan has tapped former OMERS Infrastructure chief Annesley Wallace to serve as its new president and CEO following the retirement of Jeff Wendling.
Wallace will work alongside Wendling beginning 1 March, as part of a transition period, officially assuming the role the following month.
She will join from TC Energy, an Alberta-based natural gas pipeline and power generation company, where she has been working since May 2023 as executive vice-president of strategy and corporate development and president of power and energy solutions.
Before that, Wallace spent more than 10 years at OMERS, climbing the ranks until she was appointed executive vice-president and global head of infrastructure in April 2021, two years before leaving the Canadian pension fund.
HOOPP, which has C$112.3 billion ($79.8 billion; €76.1bn) in AUM, is a relative newcomer to infrastructure, but since it began investing in the asset class in 2019, it has built up an infrastructure portfolio worth C$7 billion or 6 percent of the total portfolio. According to Stephen Smith, HOOPP senior managing director and head of global infrastructure, his team can invest up to 10 percent.
“We’re not done,” he told Infrastructure Investor earlier this year. It now has a helping hand.
Deals
Calisen gets a new read as EQT and GIC plug in
Global Infrastructure Partners, a part of BlackRock, Goldman Sachs Alternatives’ infrastructure business and Abu Dhabi sovereign wealth fund Mubadala, have agreed to sell their equity stakes in UK smart metering business Calisen.
The deal values Calisen at £4 billion ($5 billion; €4.8 billion) and sees Swedish manager EQT, via its Active Core Infrastructure fund, and Singapore’s sovereign wealth fund GIC acquire the Manchester-headquartered company. The EQT fund reached a €2.9 billion final close this year.
Goldman held a 24.34 percent stake, while GIP and Mubadala held 31.43 percent and 11.39 percent, respectively, according to Companies House filings. GIP will dispose of the stake via Blackrock Global Infrastructure Fund IV.
Equitix will retain its 32.65 percent stake in the company, which had adjusted EBITDA of £309.7 million in 2023, according to its financial report.
Goldman, GIP and Mubadala acquired Calisen in 2021.
With its new owners, Calisen seems to have found its next power surge.
ATP and OTPP sell stakes in Copenhagen Airport
In a surprise move, the Danish state has swooped in and acquired 59.4 percent of the shares in Copenhagen-listed Copenhagen Airport from ATP. This happened after ATP had taken advantage of a right of first refusal agreement and purchased a 30 percent share from OTPP to add to its prior stake.
The Danish state already owned 39.2 percent of the shares and will now hold 98.6 percent of the airport. The state’s stated long-term ambition is to keep only 50.1 percent.
It was only a couple of weeks ago that there were rumours about OTPP wanting to sell its stakes in three UK airports as well as stakes in Brussels and Copenhagen airports with Macquarie being mentioned as a possible buyer. Macquarie was an early investor in the airport and ATP bought Macquarie’s share in 2017.
The deal for the 59.4 percent stake is worth DKr 32 billion ($4.54 billion; €4.29 billion) and Danish finance minister Nicolai Wammen said the deal “will ensure that the airport will continue to have a responsible and long-term group of owners in the future”.